Excise Tariff (Fields) Guidelines 2018

Overview

The Excise Tariff (Fields) Guidelines 2018 were issued to provide guidance on the application of the Excise Tariff Act 1921, which imposes excise duty on the manufacture of fuel, tobacco, and certain alcohol within Australia. The guidelines were introduced to address the need for a consistent method of delineating hydrocarbon fields for excise purposes, ensuring that each field is allocated its first 30 million barrels as excise exempt. The Excise Tariff Act 1921 was enacted to regulate the excise system in Australia, and Section 3A of this Act authorises the Minister for Resources and Northern Australia to make guidelines for the Commissioner of Taxation in determining fields for excise purposes. The policy objective of the 2018 Guidelines is to replace the previous Excise Tariff (Fields) Guidelines 2008, which were due to sunset on 1 October 2018, without substantive change. The guidelines aim to provide clarity on the definition of a field and the application of the one-kilometre horizontal separation between hydrocarbon pools. The guidelines were developed following consultation with Geoscience Australia and the Treasury, and no industry consultation was undertaken as the policy intent was not being altered.

Scope and Application

The Excise Tariff Act 1921 applies to the manufacture of fuel, tobacco, and certain alcohol within Australia, with specific provisions for excise duty on liquid and gaseous fuels and petroleum oil-based products. This includes stabilised crude petroleum oil and condensate produced from onshore, coastal waters, and the North West Shelf project area, although offshore petroleum production is subject to the Petroleum Resource Rent Tax. The Act imposes excise on individual hydrocarbon fields with cumulative production exceeding 4,767.3 megalitres (30 million barrels). Each separate hydrocarbon field is allocated its first 30 million barrels as excise-exempt, with delineation of fields taking into account a one-kilometre horizontal separation between hydrocarbon pools. The Excise Tariff (Fields) Guidelines 2018 provides further clarification on these delineations and replaces the previous 2008 Guidelines, which were due to sunset on 1 October 2018. The Minister for Resources and Northern Australia makes these guidelines under Section 3A of the Excise Tariff Act 1921, with the aim of ensuring consistency and technical accuracy in the application of excise duties. The guidelines are designed to assist the Commissioner of Taxation in making By-laws that accurately define onshore and exempt offshore fields.

Key Provisions

The Excise Tariff (Fields) Guidelines 2018 (section 1) is a set of guidelines issued under section 3A of the Excise Tariff Act 1921. These guidelines replace the Excise Tariff (Fields) Guidelines 2008, which were set to expire on 1 October 2018. The primary purpose of the 2018 Guidelines is to provide clarity and consistency in the delineation of hydrocarbon fields for excise purposes. These guidelines outline the method for determining whether separate hydrocarbon accumulations should be considered as individual fields for the purposes of excise duty application (section 6). Specifically, the guidelines state that two accumulations separated by one kilometre or more may be considered separate fields. The 2018 Guidelines (section 2) commence on the day after they are registered on the Federal Register of Legislation. Entities governed by the Excise Tariff Act 1921, including manufacturers and producers of fuel, tobacco, and certain alcohol, must comply with the guidelines when determining the delineation of hydrocarbon fields for excise purposes. The Commissioner of Taxation is required to take these guidelines into account when making by-laws that define onshore and exempt offshore fields (section 3A). This means that manufacturers need to ensure their operations align with the delineation criteria set out in the guidelines to correctly classify their fields and determine their excise obligations. The Excise Tariff (Fields) Guidelines 2018 do not introduce new offences or penalties; rather, they serve as a framework to be considered in the administration of the Excise Tariff Act 1921. However, failure to correctly apply the guidelines when delineating fields could result in non-compliance with the Act, potentially leading to incorrect assessment of excise duties. Such non-compliance could attract the penalties and consequences outlined in the Excise Tariff Act 1921, including fines and other administrative actions. The specific penalties for non-compliance would depend on the nature and extent of the breach, as defined by the broader provisions of the Excise Tariff Act 1921.